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EPA plan could spur big ND, NW Minn. electric rate hikes

Electric customers in northwest Minnesota and eastern North Dakota saw double-digit rate hikes this year — and another increase could be on the way soon.

Minnkota Power Cooperative raised wholesale electricity rates earlier this year to pay for millions of dollars in environmental upgrades.

Now, the Environmental Protection Agency is pushing for another big upgrade and Minnkota officials say that means another rate increase for customers. The state of North Dakota is siding with Minnkota and is threatening to fight the EPA in court in what could turn into a battle over states' rights.

In Blackduck, just north of Bemidji, the Anderson Fabrics plant uses lots of electricity to run its sewing and quilting machines. It's one of the area's largest employers. Anderson Fabrics President Steve Cochems said the steep electricity rate hike of about 30 percent this spring is straining the company's finances.

"It adds to everything else that's going on," he said. "Electric rates are a key expense to a business like this."

The dramatic, regionwide rate increase affected more than 100,000 customers and is mostly due to emissions upgrades at Minnkota's coal-fired power plant in Center, North Dakota. Minnkota spent more than $425 million to meet EPA standards.

Cochems said for Anderson Fabrics, the hike means scaling back plans for growth.

"That doesn't allow you to invest that money in other places, whether it be employee increases or benefits, or bringing in additional equipment to take on new business, which would be additional employees," he said.

Minnkota is now bracing for more environmental expenses. In a few days, the EPA will release a proposed plan to curb nitrogen oxide emissions in North Dakota. It's part of the federal Regional Haze Program, which aims to improve visibility in natural areas like national parks. Regional haze regulations are being implemented across the country.

AN ARGUMENT OVER METHOD, NOT GOAL

Neither side is opposed to the goal of reducing emissions, but they differ on what would work best. The EPA's plan is different than the one proposed earlier by the North Dakota Department of Health. The state of North Dakota and Minnkota contend the EPA's technology is too expensive. They say it would cost a half-billion dollars, but visibility improvements would not be noticeably better than using cheaper, state-favored technology.

Kristi Schlosser Carlson, an attorney for Minnkota, said early tests also show the EPA's technology won't work with the type of unique lignite coal burned in Minnkota's plant. Schlosser Carlson said the cooperative prefers a technology that cleans the air without more big rate increases for members.

"We enjoy the clean air and the clean water here in North Dakota and Minnesota, and of course we see the benefits of protecting that," she said. "At some point, though, the scales tip."

EPA officials will make their plan public next week and they say it works in terms of price and efficiency.

"We have technical experts on the other side of the issue saying that they do believe that this will work," said Carl Daly, program director for the EPA's Region 8 air program in Denver. "We think that our proposal would offer technologies that are cost effective and give a good degree of improvement in visibility."

The public will have 60 days to comment on EPA's plan, with a final decision in February.

If the EPA doesn't change its plans, there will likely be a challenge based on states' rights, said Terry O'Clair, director of air quality for the North Dakota Department of Health.

"If they choose to go that route, we will be entering into court," O'Clair said. "We believe the Clean Air Act provides the states with the flexibility and the authority to control regional haze within our borders."

Ultimately, it could take several years to install the emissions technology, no matter which technology is chosen. The long-term goal of the Regional Haze Program is to return to so-called "natural" visibility conditions by 2064.